The real troubles with Australian super

What's really wrong with Australia's superannuation system? Savers don't know what they are saving for, Treasury is all over the place, and meanwhile, those in the super industry are happily skimming $20 billion a year in fees, writes Alan Kohler.

What we talk about when we talk about super in Australia is ... tax. And what a bleak discussion it is - seagulls squabbling over chips at the beach.

We have stopped talking properly about reform of the system to fix its many failings, only the taxation of it, and that's for the simple reason that it's a flat tax in a regime that is otherwise progressive.

As a result, Treasury bureaucrats constantly explain to politicians that most of the benefits of super tax concessions go to high-income earners, which is what happens with a flat tax: well-off people get to keep relatively more cash than those on lower salaries.

In damage control mode yesterday, Superannuation Minister Bill Shorten told a few journalists that superannuation taxation would simply be made more progressive - that is, that only rich folk on $240,000 or $300,000, depending on which report you read, would be taxed more. More, presumably, than last year's change, which will increase the tax on super contributions by those who earn more than $300,000 from 15 to 30 per cent.

And who can complain about taxing the "fabulously wealthy" more than the wretchedly poor? But now we have to have a debate about where, exactly, the line is between fabulous and wretched these days, given that everyone is burdened by so much debt.

Perhaps the taxation of super contributions should simply be a discount on a person's top marginal rate, so the same scales apply and we can all get on with life and stop talking about the taxation of super.

Maybe then we can talk about what's really wrong with super, which is that nobody knows what they will have to live on in retirement, so they don't know if they are saving enough - and almost nobody IS saving enough - and absolutely everybody is paying too much in fees.

What's more, the means test of the age pension encourages retirees to spend their super lump sum so they qualify for more of the pension. Most other countries require at least part of the benefit to be paid as income.

Some wise people have written in recent days that the problem with super in Australia is the post-retirement end, not the pre-retirement saving part of it. I disagree: it's both.

As the CEO of Australian Super recently pointed, excessive fees are being skimmed from our savings and the industry is "living of the public teat". I would add that there is not enough discussion with savers about the end, instead of the means. What do the terms "growth", "balanced" and "conservative" mean in the context of what a person will end up living on in retirement? How does someone save for a post-retirement income of, say, 70 per cent final salary, given the age pension means test?

As for post-retirement, part of the savings should definitely be rolled into a lifetime annuity, preferably 75 per cent as in the UK (in Canada it's 100 per cent).

The whole public policy reason for superannuation tax concessions is to take pressure off the age pension, yet there is no requirement for anybody to reduce their reliance on it: we get a tax-free lotto victory on retirement that we can either spend or give to the children, before going on the pension.

The problem is that most people feel like they won't have enough in super to make much difference. Are they right?

Well, the average super balance on retirement is around $280,000, which would provide a lifetime annuity income of around $15,000, or $577 per fortnight. That would reduce the age pension by $212.50 for a single, under the income test rules, and $154.50 for a couple.

A single retiree would thus get $1,098 per fortnight instead of the pension of $733.70. A couple would get $1,528.70 instead of $1,106.20. Those amounts represent increases of 50 and 40 per cent on the usual pension income. Is that enough? Is it worth saving 9 per cent of your salary over your whole life?

And is it worthwhile for the Government to forgo a large amount of current tax revenue (Treasury's bogus numbers put it at between $32 billion and $45 billion per annum) to achieve that small reduction in pensions later?

I don't know, to be honest, but there's nothing else to be done, let's face it. And neither side of this equation is working off good information. Savers don't know what they are saving for, and Treasury is all over the place with its numbers.

The only clear winners are those in the super and investment management industry, skimming about $20 billion a year in fees and happily supplementing their maxed-out super tax breaks with a spot of negative gearing.

Declaration: Alan Kohler is a contributor to the News Ltd campaign "Save Our Super", which is not endorsed by the ABC.

Alan Kohler is host of ABC's Inside Business and finance presenter on ABC News, as well as Editor in Chief of News Ltd publications Business Spectator and Eureka Report.View his full profile here.

James of WA:

Joe:

03 Apr 2013 4:37:51pm

I question whether Howard and Costello knew how the economy works either,

Otherwise why did they let household debt climb from 70% of household income to 153% of household income, UNDER THEIR WATCH, thereby creating a massive real estate bubble in Australia that the current Federal Labor government is now battling with all their economic might to keep from crashing down around them.

Sorry, feel free to criticise Wayne all you like, but please don't hold up the alternative as anything better. In fact if he LNP were to unleash their tough love economic policies on the Australian people now it would be an absolute disaster. Surely you can see this, the whole LNP ideology is wrong for the current global economic climate.

James of WA:

havasay:

04 Apr 2013 8:33:46am

Wouldn't it be nice if we didn't have big business - big super funds, big miners - stomping all over the government - any and all governments - whenever they try to do what governments are meant to do and redistribute the wealth of the country more fairly !!!

Thankyou Alan for confirming what I thought the last time I received the annual summary from my Superannuation fund - I'm being ripped off by a self serving industry of do nothings who are in all likelihood members of the fabulously wealthy and who are now squealing like pigs because the size of their trough looks like being marginally reduced.

I just didn't know that I was in a very large group called Everybody.

The only thing to do is to either create a self managed fund or join one of the industry funds, the administrators of which are not quite so greedy.

Tax U Bet:

Joe:

03 Apr 2013 7:18:13pm

That would be the super that was legislated under a Hawk and Keating government and is now looking like being the only thing that can financially save Australia's children and their children from a life time of debt bondage thanks to Howard and Costello putting in policies which busted households finances. Howard and Costello got almost everyone to lock up their wealth, outside Superannuation, in their houses. And when the housing bubble bursts or deflates, and it will it is only a matter of time, so will the wealth of Australian Households. But, and it is a very important but, the debts will remain and they will still need to be serviced and repaid.

Now Hawk and Keating would make it a LABOR government, correct me if I'm wrong.

I for one cannot understand why the financial creditials of the LNP are held in such reverence. It is totally undeserved.

Whitey:

03 Apr 2013 10:49:17pm

It was actually Hawke and Keating who got people to lock up their wealth in a house by making houses exempt from Capitol gains tax. Howard actually reversed that a bit, by making Capitol gains tax a bit easier to live with, and by taking some of the more obvious inequities out of it.

Roger:

03 Apr 2013 9:27:12am

And the people screaming about fairness, like Julia and Wayne, will retire on the equivalent of super balances of roughly $7million and $6million respectively, indexed for life. Now those are the" fabulously wealthy" I WOULD like to see pay their fair share!!

MDG:

03 Apr 2013 10:22:47am

Emotive and obviously politically-motived rhetoric. There is an argument, which is not without merit, that MP super should be reformed as a symbolic gesture and a demonstration of a willingness to lead by example, but MPs' super could be abolished entirely without making a difference in the cost to the taxpayer of the tax concessions regime.

Hervey Bay:

03 Apr 2013 4:48:16pm

If the earlier comment was 'emotive', it is only because the issue of a publicly funded benefit well beyond the reach of other Australians simply stinks of rent-seeking, verging on corrupt and self-interested behaviour. It is not wrong to emote and be pissed off about such blatant inequity.

You may be right that the absolute value of supporting this generous and early financial benefit is small compared to the revenue-raising powers of the Commonwealth. That is a purposeful denial of the real issue.

The point is that politicians are guaranteed a generous financial outcome at public expense, yet legislate for substantial personal taxation from which they are effectively exempt. If nothing else, that is a corruption of process.

The French aristocracy made themselves exempt from taxes, and it sparked a revolution.

The bottom line is that the personal financial benefits to politicians out to be aligned with other Australians, who do not have access to the generosity of the Commonwealth defined benefit. That way, taxation policy will at least benefit from personal exposure to their own decision-making, just as with other forms of personal taxation.

In being so dismissive of this genuine and systemic problem in our polity, I can only read your dismissive response as "politically-motivated".

harvey:

03 Apr 2013 6:38:58pm

Yes and that is the point, it was the aristocracy that made themselves exempt from taxes, much like the work in progress in western nations of cutting and chopping the tax rates for the extremely well off.

And I would say that people on more than $150,000 a year qualify, unless they have chronic illness requiring expensive medical care, or disabled children.

The politicians all have their snouts in the trough, ALP and Libs. They are merely bit players though.

Its the super rich who can afford to 'contribute' to political parties to buy favours, and who can fund lobbyists to schmooze with the pollies that are the real parasites on our economy. Not the people who need to live from paycheck to paycheck.

I tell my kids who are in their 20s that super will probably not exist when they are ready to retire, what with the dismantling of government bit by bit, climate change, the US ramping up for war in Asia etc etc. No-one can predict the next 10 years, let along the next 30 years.

MDG:

04 Apr 2013 8:54:16am

I'm completely in favour of revising the system of benefits available to a few hundred politicians. I'm just not willing to let that comparatively small, albeit symbolically important, issue be used as an excuse not to look at the problems affecting a system used by millions of the rest of us.

Roger:

03 Apr 2013 5:24:30pm

Ah, so Craig Emerson talking about the fabulously wealthy is not being emotive and obviously politically motivated but I am for pointing out his horrendous hypocrisy. It must surely be a wonderously fantasmagorical place to inhabit the mind (for want of a better word) of a Labor supporter these days.

MDG:

04 Apr 2013 8:55:55am

Of course Emerson is politically motivated. He's a politician, for heaven's sake, what did you expect? Surely the purpose of expert commentary from experienced people like Kohler is to open up an avenue for informed debate away from the spin of Emerson or Hockey or anybody else with obvious vested interests.

Rob:

03 Apr 2013 10:51:31pm

Couldn't agree more- the incredibly generous super scheme for pollies and the senior public service should be the first cab off the rank- that would nullify the "class warfare" argument and they should make it retrospective to the last election. The old union boys will be sputtering over that one -not the trough they were aiming for

Id:

04 Apr 2013 7:43:36am

I see no criticism at all about the obscenely overpaid plethora of CEO's and other executives. Politicians are paid peanuts in comparison.Most CEO's don't need superannuation.How long does it take to spend a $5 million golden handshake?Tax deductible superannuation contributions are merely tax dodges for which the rest of us pay.Let us hear some figures of how much tax is lost through the super rich rorting the system.

David:

04 Apr 2013 7:05:08am

This Labor government is fond of symbolic gestures and showing a willingness to lead by example at personal cost (climate change comes to mind), so this should be an easy choice. Its not as if these politicians will be suffering when they do leave office as they will slide into board and consultancy positions if not an ambassadors suite.

Marrow Master:

03 Apr 2013 12:11:56pm

Roger:

The Parliamentary Superannuation Scheme:

I think that is the name that the federal Politicians contribute to. I understand it is the least effective in Australia based upon contributions versus payments received. I would love to contribute to that scheme.

Dianella Fella:

03 Apr 2013 6:06:50pm

51% of the Parliamentarians scheme funding comes from the tax payer. The next best is the CSS (Comsuper) also a public service scheme now closed (since 1990) it costs us 27%. PSS (the defined bft scheme) is up to 21%. All of these funds are constitutionally protected ie they don't tax earnings or cotributions until the member retires etc. Start with addressing the imbalance there and you might get some sympathy from the rest of us who only get 9% super and are taxed on our money going in, on its earnings and soon to be when we get it out (over age 60). Makes me sick.

stevei:

03 Apr 2013 12:19:57pm

Get into parliament, Roger, and stop whinging. Abbott and his mates get super too. If you want to grumble how about grumbling about business executives who have immoral salaries in the millions and get paid equally immoral bonuses even if the company loses money!

ateday:

JLM123:

03 Apr 2013 2:59:17pm

It is way overdue to make all pollies have a normal, just like every-one else, Superannuation scheme.The WA State members of parliament years were put onto a standard one years ago for all members entering after a specific election. It was not rocket science and being a MOP is just another job.Gone are the days of not being able to transfer your super when you change jobs.

Peter:

04 Apr 2013 7:31:52am

Sure - Julia and Wayne are effectively CEO and CFO of a trillion dollar company called 'Australia'. Pegging their salaries against the likes of BHP and the banks, they should both be earning $10 mill+ per year rather then the paltry $500k they get now... with share options and a handy separation bonus.

Mick:

03 Apr 2013 9:27:27am

Cabinet Ministers (including Bill Shorten and the "fabulously wealthy" Craig Emerson) earn over $300,000 pa. How much additional tax will they (and the outrageously wealthy PM) be paying as a result of the extremely generous superannuation payments they are set to receive for the rest of their lives.

Oh! That's right. There will be no effect on their income, nor their pension, as a result of these changes because their superannuation is all paid for by the taxpayers. The same taxpayers that they now want to punish.

Dazza:

dman:

03 Apr 2013 12:07:21pm

to steal a quote form the Big Lebowski - what in god's name are you blathering about?

Everyone has to pay tax, even the MPs. Why would they be exempt?

We don't know too much about the proposed increase on super tax, but if it's a tax on very high income earners then not everyone will cop the additional tax. quit the hysteria! or go log onto the australian if you want to carry on with nonesense

Mick:

03 Apr 2013 5:00:43pm

dman, This is not about whether or not anyone pays tax, it is about the effects on contributions that employees make to their own superannuation.

As the politicians superannuation is so generous (well beyond anything you or I could ever get), I doubt very much that any of them make any additional payment from their own pocket. There super is paid for by all taxpayers.

NoelP123:

JOP:

03 Apr 2013 12:15:41pm

There will be no change to 90% of taypayers under the proposed changes. Those being 'punished' earn pretty much the same as (or shedloads more than) those politicians you're bagging. Fell into the tabloid media trap, eh?

Mick:

03 Apr 2013 4:41:13pm

ron,

You need to do your homework.

Not all politicians get paid at the same rate. There is a base wage of $190,550 for all MP's. Then you can add to that the loadings they get for the various appointments ie the PM has 160% loading ($304,880) on top of the base salary.

Cabinet Ministers, such as those I mentioned, receive 72.5% loading ($138,149) on top of their base salary, which puts them over the magic $300,000 that is being bounced around as the cut-off figure.

The fact that non other than Labor politicians hold these appointments is why the only people I mentioned are members of the ALP.

So you see the same doesn't apply to all MP's. It doesn't even apply to Labor backbenchers.

Liberation:

04 Apr 2013 3:54:18am

Well for a start Costello stopped taxing annuity and lump sum payments thus negating tax on outgoing payments. Are you saying that this did not have a substantial effect on retirees. It was certainly a positive for me as a self funded retiree with a modest annuity.

Xanh:

Abbott and his shower are in exactly the same position - politicians. Don't be fooled that they are all sugar and spice.

The taxpayers the ALP want to 'punish', if any, are a small percentage of those on high incomes. The big majority will not be affected.

And 'punish' is the wrong word. This is only about reducing a concession - since when do concessions become a right?

The lowest income earners (including part-timers, the underemployed etc), have benefited by a tax offset from Gillard, but which will be removed in a nasty, regressive act by Abbott. Abbott will be a direct punisher.

By the way, Abbott only guarantees (not that his word means anything) no changes in a first term, apart from the punishing of low income people by removing an existing benefit. This means it is certain he will want to have a go at super to fund his chaotic and illogical mish mash of promises.

It is weird that so many are opposing changes that might benefit them through a better Federal budget position. What programs do you propose to be cut to make up the money from this kind of measure? I know Abbott will hit health and education, but what do think?

Mick:

03 Apr 2013 5:09:09pm

Xanh, I presume that the low income earners you refer to are those that earn less than $37,000 who may loose the Government co-contribution payments which max out at $500.

Firstly, co-contribution is only matched by the Government for each dollar that an employer pays into their super. I don't think there are to many earning less than $37,000 that can afford to contribute more to their own super.

But more importantly, the co-contribution scheme, introduced by the Howard Government, was paid at a rate of $1.50 for every $1 contributed by the employer, up to a maximum of $1,500. Since coming into office the ALP as reduced the co-contribution down to $1 to $1 and reduced the maximum co-contribution down to $500. Where was your complaints then?

Mick:

Steve Mount:

03 Apr 2013 3:10:50pm

There was recently a Labor leader, in Opposition, named Mark Latham. He, alone among all others, recognised that the polies' taxpayer- funded supere scheme was extremely generous, and way out of line with what the normal worker could expect from market driven super schemes.

Being a somewhat pragmatic person, and having (shock, horror) some Socialist beliefs, he announced a policy change wherein such exclusive generosities would be wound back, under him as PM. The resonance within the electorate was so strong that the then PM, John Howard, also announced a similar winding back, and enacted his version of the ideology in legislation.

When Howard won the next election, and Latham was consigned to the dustbin, Howard promptly unwound his prior 'winding back' and things, essentially, returned to where they were before.

And thus they remain. The scoreline stands at : Latham - 1. Gillard - 0. Howard - own goal. John Howard is reaping the fruits of his efforts, even as you speak, but so too will Gillard.

Mick:

03 Apr 2013 4:56:27pm

I'm pretty sure that Howard did make huge changes to the MP's super arrangement in that new MP's now have to wait until preservation age until they can lay their hands on super, just like the rest of us.

lazarus:

chalkie:

03 Apr 2013 9:30:44am

Super should cover most of the anticipated retirement costs we each are likely to incur: not just income (ie pension and super) but also aged care, additional medical costs and even carers payments. Singapore manages to force workers to give as much as 34.5% of total wage to savings: 14.5 from the employer, 20% from their own wages. And this should be obligatory to spend this money on this, not hived off to the kids.

Of course, there is zero tax on this compulsory super contribution, and no management fees really as the government runs the fund.

DethLok:

03 Apr 2013 10:41:24pm

So... it's kind of like a "tax" on your "income"?And when you retire, the government pays money out of the collected "taxes" to pay you money to live on, kind of like an "age pension"? And you get cheap or free medical treatment?

dman:

03 Apr 2013 12:11:46pm

but less people paying tax means less in the pot. with an aging population, some of who are exceptionally wealthy, why shouldn't they pay tax? Why should a retiree at 65, or could possibly live for another 20-25 years, who has millions in super not pay much tax, after all, they will be the ones chogging up the health system, using our roads with their caravans etc etc. I think people confuse retirement, with lifestyle. Everyone wants to retire with a property portfolio of 10 houses, a weekender on the coast, a boat a caravan, and overseas trips. Meanwhile the minority of the population who are left still working fund all the services and infrastructure that they require. this is the best way to end up like greece

John of WA:

03 Apr 2013 12:34:03pm

Super rich tax breaks aside, the bizarre thing is that recent changes have made it better for the lower end contributors who will never put in enough to be 'self funded', but made it worse for the middle income group of over 50's who are in a position to salary sacrifice more income now that the end is in sight and who could, in all probability, become entirely self funded. There is no doubt that some of these changes were simply to try and achieve the mythical surplus. It's a double fail: no surplus and a lost opportunity to get people off the books. Having said that, Mr Abbott is going to claw back the 15% break from the real battlers and not make it any better for anyone else so, despite his rhetoric, everyone will actually be worse off than we were 12 months ago under his Government. But don't expect to read that analysis anywhere.

OUB :

03 Apr 2013 6:06:09pm

Unfortunately the break for low income earners (replacing another break for low income earners) is essentially unfunded. If you are on low income for your working life then the odds are it makes no sense to leave it in super any longer than you have to due to fees and the 15% tax regime (unless fully retired or transitioning) - it will get taken out and head for a bank account. Marginal tax rate is likely to be zero. The pension beckons, double dipping ensues. Whether it is inequitable I don't know but you'd want to look at it twice.

I don't have a problem with tax on super being made progressive so those on higher incomes pay a higher rate. But I do not think that should accrue to existing super savings. People invested on the basis of a set of rules put in place to encourage super savings. Now that the funds have gone into the compulsory savings regime and become hard to remove how can any government change the rules in good conscience? They may as well be used car salesmen trying the old bait and switch. Making it apply only to future savings sounds equitable to me but would probably complicate things terribly. And it wouldn't solve Swan's temporary fiscal embarrassment. It's the politics that are important to Gillard and Swan, any equity is incidental. Or accidental. No need to trust Abbott to do any better but hopefully there would be a little more consistency.

bob:

03 Apr 2013 3:40:28pm

There will always be a pension for the very reason that people currently spend their super lump sum and go on the pension, old people vote and they form a large block. It would be a strange election indeed where the political parties would ignore a block that is at least a minimum of 10% of the population.

chalkie:

03 Apr 2013 9:32:51am

How about a floating super rate to augment the RBA's interest rate fiscal policy - one that quells demand but does not kill business or mortgage holders?

Or one like the Singaporeans, one that declines with age? Why is there no discussion about the (arguably superior) international comparisons? Or is the media debate ONLY capable of knee-jerk reactions to government policy?

the yank:

Methinks:

03 Apr 2013 9:35:09am

We certainly do need a debate about superannuation but we have buckley's chance of getting it. This country seems incapable of having a debate about anything.As Alan and other wise heads say that debate must be about sustainability of the system and not simply about tax. And yet, this increasingly silly government framed the current nonsense around the coming budget bottom line which makes it easy for anyone to paint measures that emerge as simply a tax grab.I am inclined to agree with Crean around retrospectivity. Given that governments of all persuasions have pushed us all to contribute more, only new contributions should be subject to any additional tax burdens. Any existing balances must be grandfathered and those already drawing pensions regardless of age must be immune from any changes. That is a start. Then we should try desperately to have the proper debate.

ateday:

Eric:

Where ever there is a fund, there is a money manager, and where ever there is a money manager there is somone trying to milk the fund.

That manager claims to deserve a bonus when he makes money, but never deserves to take less when he looses money.

In most cases that manager has done very little to increase the fund. If it is a bull market it will rise for everyone, if it is a bear market if falls. If for some reason more money is available to the maket that means there is more money chasing fewer shares, so shares rise.

The market is based on emotions not maths. An item of news and an interpretation and the market goes one way or the other .... the market is fickel.

The more managers take out of the fund, the greater the fluctuations will be for the retiree.

ron:

If I earn income then I pay tax to the government. If I don't earn income I don't pay tax.

However, fund managers always get there cut (administrative costs my *%$#) whether they make or loose money.

The biggest reform needed is to the fees. The funds should only be allowed to take a standard minimal fee determined by a regulatory body. This could then be supplemented as a small percentage of gains. This way the fund managers would be forced to perform more consistently and not say 'oh the market is bad at the moment say your assets will unfortunately decline, thanks for the paycheck though - (my retirement is looking pretty good)'.

dman:

03 Apr 2013 12:14:03pm

good question Me. Funny thing is these people who want the govt to subsidise their massive debt and investments are the first to cry foul when an NDIS is implemented, or who carry on about dole bludgers, and whinge about asylum seekers.

Baby boomers - the generation of the inherently selfish who never grew up!

Sammy W:

03 Apr 2013 12:40:04pm

Here here! Citing debt, even if it's accrued by the fabulously wealthy, as a reason it's difficult to differentiate between rich & poor is disingenuous at best. We live in a (mostly) civil society that prides itself on equality & giving citizens a fair go. It doesn't mean we support the wealthy in their efforts to acquire mansions & BMWs.

Besides, what's wrong with the old-fashioned sliding scale for tax? I think we're all brave enough to argue that a household income under 50k is low & one above 150k is high. (Above 250k is obscene, but that's another story.)

Michael:

03 Apr 2013 5:40:43pm

But that's just it, it isn't fair. Fair means the same rules for everyone, not punishing those who do well for being successful, not giving handouts to the 'poor' who vote for you. Not changing the rules so those who are managing their finances suddenly find themselves unable to cover their repayments - while giving a big wadge of $50s to folk who, really, haven't done anything to deserve it.

This messing around really doesn't hit the super rich - what it does hit are the middle classes, who seem to get slugged by some government or other whenever they seem top be getting ahead.

Cherna:

03 Apr 2013 9:47:48am

The more pertinent question would be why dink with something that has been legislated to encourage people to save for their retirement without putting a strain on Governments having to for out for pensions?

When Governments start to dink with savings contributed legally under legislative guidelines its makes everyone nervous - sure the endless commentary from Gillard's mob is they will attack only the rich. Sure but subliminally one thinks 'who is rich... am I next... should I really make contributions ... its all uncertain so I'll leave the money in the bank...". The very thing that Super was designed to do is being eroded by a government determined to wage class war on its citizens.

To rub salt into our collective wounds we discover that: Gillard and the World's greatest treasurer will end up $177,000 and $168,000 per year respectively. And wait for it: they don't have to wait for a retirement age to get the money as it's paid out yearly once they leave parliament, or are booted out in September. Does the word 'hypocrisy' come to mind?

Until yesterday I was unaware that Gillard was a card carrying member of the communist party; on learning this fact all of Labor's inadequacies fell neatly into place - the class warfare, the attacks on the rich, the self-cantered machinations of Machiavellian proportions to stay in power, the banishment of their own who express a differing point of view, the ability to grasp fundaments relating to business and commercial activity, the lies and dishonesty, the corruption, the alignment with unions, the governing for unions rather than for Australia, ... and on and on, on ... about traits associated with all communist parties.

The Labor Government has done and is doing real damage that will take years to repair.

MDG:

03 Apr 2013 10:19:37am

You've posted exactly the same thing in a separate thread (though minus the rant about communism) and the answer is exactly the same. As Kohler asks, "is it worthwhile for the Government to forgo a large amount of current tax revenue (Treasury's bogus numbers put it at between $32 billion and $45 billion per annum) to achieve that small reduction in pensions later?" The concessions regime is costing the government such a fortune that it is barely saving money on pensions at all. That calls into question the functioning of the superannuation system which, as you say, was legislated to take the strain off government by relieving it of the need to pay for everyone's pensions. If the system meant to avoid the cost of pensions is costing as much as pensions, the system is broken and needs fixing. It's pretty simple.

MJMI:

Bingo:

03 Apr 2013 4:36:24pm

Cherna, seems even educated Liberal trolls are really dumb.

It is almost quaint, but stupid to invoke communism. The 'class war' mantra is the single most idiotic of all of the simple little phrases parrotted by Abbott, Pyne etc and those conned by their snake oil.

If anything, the protection of the wealthy from paying fair tax is the 'class war'.

Along with Abbott's direct attack on low income earners by removing their tax offset and thus leaving them out of pocket. Some end up paying more tax on super contributions than on income, while there are those on high incomes who avoid $10 000 pa at the expense of everyone else.

The 'avoid the pension' argument is a crock as shown here. Especially beyond the point that someone has accumulated enough that the pension is extinguished - why argue for gigantic tax concessions for those who would not be getting the pension anyway versus those that actually would be reducing their pension, starting with low income earners where the effect is greatest.

For those beyond the pension point, the 30% tax concession is just a tax avoidance scheme. Just look at the numbers, the system is grossly unfair and easily fixed.

Howard promised to reform politician's super, but then broke his promise (no surprise there). Where is your saviour St Tony saying that he will reduce his super?

The stench of hypocrisy hangs over him too, as do ALL of your accusations except the hysteria about unions. He will not be the one to repair the 'damage', rather is a disaster in waiting, as many Liberals actually know.

Mac:

03 Apr 2013 4:30:51pm

Sue, like so many you believe all the propaganda in news ltd newspapers, Australia has a AAA rating with all 3 ratings agencies which has NEVER been achieved by any Liberal government. labor has done this through economic management never seen in this country, their economic management is recognised and being copied by nations all over the world as is the need to not always be in surplus. Under Howard and Costello surpluses at times when a greater wealth was there for the taking meant neglect in infrastructure, health and education, just like the Vic, NSW and Qld Liberal governments are neglecting their states. Right now Australia is in one of the developed worlds best financial positions because our government is doing more to close the social divide than any Conservative government as conservatives do no care for 90% of people as only 10% count.

Bernie:

03 Apr 2013 9:51:01am

Wow! Super Investment Management Industry skimming about $20B a year in fees. When I retired in 2006 I received $20,000, all gone now of course. A baby boomer, a worker in private industry on a low wage when Paul Keating introduced Superannuation for all Australians. (Remember how it was going to send the Country broke). I would like to quote news.com on the 01/02/2013. "Abbott to up Super Tax on Battlers""Superannuation emerged as an electoral issue, after Opposition Leader confirmed plans to axe a Superannuation tax break worth up to $500 a year for 3.6 million low income earners.""Meanwhile Labor is running the ruler over the nest egg of high income earners in its search for budget savings."We have had all the hype and speculation over what the Government is going to do with Superannuation Tax on the rich at the next budget and getting ourselves into a froth over it and meanwhile it all seems to be ok that a confirmed policy of Tony Abbott will be "to up Superannuation Tax on battlers"". Unbelievable!

point well made:

03 Apr 2013 10:41:36am

Good on you Bernie. You are completely right about the media fixation with this "class warfare" narrative and have failed to point out that at this stage the only party that will decrease tax breaks on super is the opposition.

However it also probably reflects how people fear the unknown and why the Labor parties plans are not laid out bare it is easy to generate fear. As the saying goes "better the devil we know than the one we don't."

Andie:

Bernie:

03 Apr 2013 4:44:17pm

I'm not screaming, I just wrote a fact, something wrong with that? You obviously didn't get it. The media is frothing on about a tax that is speculative, whilst Tony Abbott has actually announced as a policy that will attack 3.6million of the lower paid, and not a word. Unbelievable!

Tax Me:

03 Apr 2013 11:37:41am

Bernie, I'll let you in on a little secret. Next time you get the chance to quiz a member of the government, ask them this question - why have you reduced the level of the governments superannuation co-contribution over the last two years?

This measure was introduced in 2003 to assist low income earners. Each dollar an individual put in, the government would match it dollar for dollar. It was increased in around 2006 to $1.50 for each dollar contributed. And then, a couple of years ago, guess what? It was paired back to the original level.

Seems too coincidental that we now have a $500 tax break substituted for this reduced co-contribution.

harry:

Bernie:

03 Apr 2013 4:38:53pm

I remember the same sort of narrative about the prrt. 1989/1990 $42 (Hardly worth it, A big failure)1990/1991 $293mHoward years it reached it's peak in 2000/2001 $2379m2010/2011 $806mI am sure the mrrt will follow the same line

Andie:

dman:

03 Apr 2013 9:20:01pm

Yeah it seems so. But my point is, if that 60% of the electorate doesn't think about what they'e doing they could end up with an even worse govt. if you've already made up our mind that Abbott is fit to lead our country you're a bit loopy in my books

Cap'n:

03 Apr 2013 9:52:39am

A major problem with the super industry is that it is embroiled in politics. The current brouhaha about higher super tax rates on very-high income earners is a good example: while on the face of it introducing a more progressive taxation scheme for super contributions seems a reasonable discussion to have, it gets clouded in political rhetoric about class warfare and money grabs and "they'll be coming for yours next".

Gilly:

03 Apr 2013 4:05:21pm

Yes Cap'n superannuation is embroiled in poletics. However the amount of noise appears to be directly linked to the amount of money involoved. A lot more noise about the well off having to pay more than about battlers receiving less. Again money rules mot the electotate.

Reformed Messiah :

03 Apr 2013 9:53:05am

Yet another opinion piece by kohler that ignores the main issue and appears to be aimed at confusing the public.

The issue with super is easy, not complicated. High earners get high tax breaks for their super contributions. If someone puts $30 000 per year into their super fund then they get a tax break on that money. This costs the people lots of money that should be paid as tax. Just think about how much money you must get if you can afford to put $30 000 of it away in a super fund. This is not saving the government money on pensions in the long run. These people earn far too much to ever qualify for an aged pension. This is just a rort introduced by howard to look after the ultra wealthy.

Its not complicated at all. Just remove the tax break for these people. Where you draw the line is the only hard bit but even that is not so difficult. Draw the line at the median wage.

Labor has lost its way, it can never justify looking after people on $250 000 per annum as fitzgibberer wants and still claim to represent ordinary workers. It can however even up the scales a bit by looking after those who really need it and they would be those people who receive the median wage and below.

rob1966:

03 Apr 2013 9:58:04am

Some of us always knew it was never going to end well. A large pile of other people's money just sitting there was always going to be an attractive proposition for Government, especially a Government that is struggling to demonstrate economic competence (at least by their own definition of delivering a surplus).

So we have a situation where Government has FORCED us to put aside money as savings.

We are informed that in order to retire on about $50-60,000 pa we need about $1.2m in Super at age 65, and are encouraged to put additional funds aside in order to achieve this.

Government comes along and states "how dare you save money for your future. how dare you attempt to be self sufficient. how dare you!" and proceeds to punish you for doing so.

Just as those of us who educate ourselves and obtain a lifetime of full-employment are expected to pay those who can?t be ar*ed getting a job to live; those of us who plan for our retirement, and put money aside in order to do so, are now expected to pay for those who can?t be ar*ed planning their retirement either.

Australia, the land where if you dare try to succeed you?ll be treated as a pariah and punished for it.

Every time I think I?ve achieved something and that my future is financially secure, the government comes along and rips the rug out from under my feet! Why do I bother? I?d be better off living off the public teat like everyone else ? at least then I could spend the day down the beach instead of working 12 hours.

sdrawkcaB:

If the1966 part of Rob1966 is the year of birth then you will be eligible to retire in 2036 assuming a retirement age of 70 by then.

Peak oil will occur before 2020 if it has not already. That has more than nuisance value for a system of economics based on cheap and transportable energy.

Putting that to the side, we have a person who predicted the GFC suggest another one is coming within 5 years but this time, governments are broke so they cannot bail out the private sector like they did last time.

I guess what I am leading to is you may be wasting your time attempting to be financially secure. There are some who cannot see the system lasting another 23 years and these people are not considered to be crackpots like they were in the past.

That said, your experience has probably also been mine to some extent. Despite some fairly intense attempts to marginally elevate myself above the pack by pursuing education and long work hours, the last 20 years have been about marking time and being relieved the 1980?s were good to me.

Honest Johnny:

03 Apr 2013 10:02:38am

"Perhaps the taxation of super contributions should simply be a discount on a person's top marginal rate, so the same scales apply and we can all get on with life and stop talking about the taxation of super". A very good point Alan, and something that would simplify matters considerably. That would work so long as negative gearing and other interest deductions were added back to taxable income similar to "adjusted taxable income", otherwise we would soon see a property bubble.

Tory Boy:

Jay Somasundaram:

03 Apr 2013 10:04:07am

Recently came across what appears to be a rort by my super fund - they have a "compulsory" death and disability insurance scheme that members cannot opt out of. This is allowing the super fund to charge money that it doesn't have to report under fees and charges. It also appears to be much higher and less tax advantageous than if I went and got insurance directly.

Hobbit:

03 Apr 2013 10:30:06am

I have personally no confidance whatsoever in the super industry. All that money is invested in property/shares/you-name-it, and with another GFC (the 2008 one has never been properly resolved), there is nothing to guarantee that all those trillions of $ may not lose several zeroes just like that, as it happened under Costello who had entrusted the country's nest-egg in what he thought was a safe investment.

Bighead1883:

03 Apr 2013 10:31:49am

OK Alan,your comment on those in the super industry happily skimming 20 billion dollars a year in fees,gives the strongest reality that we should have a publicly owned bank again[AKA Commonwealth}.This cash cow is open to too many rorts and insider trading along with the ever present toxic Investment bank crap CDO`s and credit swaps.HFT has made super funds a milking point of International Bankers along with sovereign wealth funds and future funds.Unregulated banking has no right controlling these types of funds.I dare a plebiscite on it.

Mick:

03 Apr 2013 10:37:44am

As a recent retiree I can tell you that it is nigh on impossible to work out how much income will be required in retirement.

I thought I had it all worked out but I couldn?t predict how much the cost of living would increase in such a short period of time, outstripping the CPI by a country mile. How could anyone have predicted and allowed for the outrageous increases in the price of electricity and water? Both items being basic essentials.

The other crazy factor often overlooked is how much more the cost of living increases because of retirement. When you are at home rather than at work you consume far more electricity. There was no need to warm/cool your house when you were at work but after retirement they become another addition to the budget. If you are not at home you are probably out driving around consuming far more fuel than when your car was parked all day while you were working. And so on . . .

Bighead1883:

Maynard:

03 Apr 2013 10:50:44am

When the ALP opens the class war, war, always be ready for anything from them, except 457 visas, equity & working people.The super wealthy in this war are the public employees, in all areas who are entitled to a public pension. The key players are our rulers, the politicians on unfunded pensions. At the federal level, the cost of this underfunding is about $100Bn & this could be doubled to $200Bn, Australia wide.Now our rulers and their advisors, the public servants who set up these schemes to benefit themselves to the detriment of us & the nation. All these schemes should be abrogated now and replaced with a standard scheme that would meet community standards. The savings can be measured in tens of billions & our children/grandchildren will be alleviated of a taxation blight on their lives. This approach would also remove a brake on our economic growth & be equitable to all.Julia could lead by example, that would get my vote. Honesty from a politician, how quaint.

Roscoe in the middle :

03 Apr 2013 9:03:14pm

You need to keep up Maynard, only publix servants employed before 1992 (roughly) are eligible for defined benefits, the rest are on the same wicket as everyone else, although Federal goverments employess receive around 15% super as part of their salary package I believe.

I guess you could change things retrospectively for those approaching retirment now or those already retired, but that seems a bit unfair to me.

The superannuation benefits for MP's appear to be quite generous, but I guess there needs to be some perks to being a politician. I know Im not interested.

Maynard:

04 Apr 2013 9:17:02am

Roscoe you got half of this. All people who get superannuation from governments are treated better than the rest of us. For instance academics get about 20% from us for their super. As pointed out this runs into hundreds of billions from us the ruled to our rulers, a bit like the dark ages really. Now this crime or rort should stop & all public employees should get a standard super scheme like the rest of us (9% employer contribution). this alone would solve our debt and deficit crisis that is causing major equity problems now and has set up an intergenerational financial crisis. Look at what has happened in Europe, a significant part of the crisis is caused by public employee (rulers) putting themselves way above the rest of the population (ruled). It is about as base as a nation can get...robbing the bulk of the population for the benefit of a few...nomenklatura, whatever

2Much:

03 Apr 2013 11:01:55am

It doesn't help when our share market lost 50% in the GFC and still has regained only 50% of that loss, while US shares have regained everything. That's thanks to a government that can only annihilate confidence with their Robin Hood taxes.

JoeBloggs:

It would be nice if the superfunds were actually transparent about their fee taking.

Most of the fees taken are never actually disclosed as the fees are taken from the income prior to the income arriving at a fund, as such they are never disclosed.

Only the 'management' styled fees seem to be disclosed yet this represents very little of the actual fee base.

Having previously worked in a large organisation that looked after peoples money I know that the vast majority of the income belonging to a person/fund is taken in undisclosed fees prior to the money getting anywhere near the fund itself.

Colmery:

03 Apr 2013 11:34:17am

Mr Kohler, you write; "seagulls squabbling over chips at the beach" ... I thought Bjelke Jo had established sometime in the 1980s that you and your lot were chooks. Is there nothing we can rely on to stay the distance?

Well, at least it's still a sort bird - the most lightweight of the animal kingdom, and of course the ones that take flight when the going gets tough.

andrewk:

03 Apr 2013 11:38:59am

"Perhaps the taxation of super contributions should simply be a discount on a person's top marginal rate, so the same scales apply and we can all get on with life and stop talking about the taxation of super"

Here is yet another article that perpetuates the twin myths that:

1. the only tax on super is the contributions tax (ignoring the benefits tax), and

2. the only way to improve equity is to make the contributions tax more progressive (ignoring the option of increasing the benefits tax and making it more progressive).

How can we expect to have an informed, civilised debate on this issue when even a specialist finance journalist is unable to accurately present the facts?

Robbie:

03 Apr 2013 11:46:10am

"... it's a flat tax in a regime that is otherwise progressive."

So says Alan, but not so. The GST is part of the tax regime and it is very regressive, although there is seldom any mention made of it. Both rich and poor pay GST of 10% on, say, their electricity bills. Probably inconsequential to the rich, but an added burden to the poor.

buttercup:

03 Apr 2013 11:54:20am

I worked out years and years before I retired that starting your own superannuation fund saved all those horrendous fees we were paying. We have now rolled all of it over into an annuity and live very comfortably as a result.

It isn't rocket science to run your own superannuation fund, just rules you have to adhere to and get good advice on how you invest the money.......and spread it around.......not all your eggs in one basket.

A good thing to think about........running your own superannuation fund.......correctly instigated, correctly audited every year by your accountant and make sure he complies with all the reporting. Other than that, go for it.

Tax Me:

03 Apr 2013 11:58:56am

The current "noise" over superannuation reminds me of an old French proverb translated into English being "the more things change, the more they stay the same."

In the late 1990's the then government introduced the "Superannuation Contributions Surcharge." It was targeted at supposedly high income earners (with a base of $85k in its inception year rising with indexation to $121k when it was abolished in the 2006 financial year). The government argued tooth and nail it was a surcharge, not a tax. It also argued that it would target higher earners only. However, due to its design it caught out many unsuspecting wage earners and had some horrific taxing consequences on, for example where a person received a lump sum payment. Due to its calculation methodology - not on taxable/assessable income but on a concept called "adjusted taxable income" - it became a nightmare to calculate and to reconcile. Further, those that are within Defined Benefit or other protected funds will only feel the consequences of this surcharge (industry called it what it was - a Tax) upon retirement - due to deferral arrangements that were put in place by fund trustees.

So, the essence of the story. If the government wants to tread a targeted path. Go back and have a look at history and have a look at unintended consequences that occurred under previous legislative attempts at targeting "higher income earners."

And to Alan, I'm surprised that you nor any other commentators out there remember this little "gem."

Harriet:

03 Apr 2013 6:50:40pm

My husband is 50 years old. For last 2 years he has been 'fabulously wealthy' on a $300k salary. For approx 2 years before that he was 'rich' on approx $130k and for the 26 years before that he was on less than $90k - most of those years a lot less. He got burnt changing jobs at the height of the GFC causing him to get hit with the deferred surcharge and penalty interest that had been poorly advised and mishandled by the state government super fund that he was forced to belong to. Consequently at age 48, he has less than $100k in super. Since being fabulously wealthy, he is penalised if he tries to make additional contributions.

This is not to say Poor me or to suggest he should pay less super tax than people on lower salaries BUT it does demonstrate that not everyone on $300k is fabulously wealthy and rolling in super.

We have NO FAITH in super and would rather keep our savings outside this system free from constant tinkering. Our plan for retirement, especially as we have young children, is to keep working. As I am 13 years younger, it will be up to me to become the breadwinner and provide for my husband as he has provided for me while I have looked after the babies. Although professionally trained and university educated, my super balance is less than $25k.

dman:

03 Apr 2013 7:49:58pm

Harriet, you ar.e crying poor me, that is exactly what you are doing. You have no concept of the aver.age persons reality. $300K salary is mahoosive!! Mega-ginormous! And $130K is also a very big salary. Now you say that for the last 26 years he was on $90K.....blimey luv, $90K for the last 26 years!! 10 years ago $90K was a very big salary, 20 years ago it would have been even bigger. At what point in your life can you say you are being penalised, especially when you're on that sort of money.?? What happens to you is that you don't get a concession, you are not being penalised, you just don't qualify for a concession. And why should you....because, despite you're ludicrous grasp on reality, your are most certainly fabulously wealthy. How greedy can you be.?....you family is earning in excess of $300K and you whinge because you don't get a tax concession. I suppose next you'll be asking for concession travel fares for public transport...oh sorry, I mean you'll ask to stop being penalised for being wealthy by having to pay full fare for your trip.

There is a certain section of selfish Australia that just don't understand how ruddy wealthy they really are, and you have the blinkers on Harriet sitting in that camp. It is a tragedy that this nation has become so selfish and greedy

mushroom:

R U Serious:

03 Apr 2013 4:59:12pm

Mushroom, I have no idea what you have your faith in. The current state of the super industry must be addressed and cannot be left open to rorting and abuse by investors, managers or salesmen. Taxpayers have a vested interest in the proper management of super and Government has a moral duty to protect that interest, as well as implementing the legislative intent which is to provide income for retirees.

Steve:

03 Apr 2013 12:17:49pm

Super is a tax grab + a pocket liner for already multi billion $$ companies so they have someone elses money to gamble on stockmarkets.Why is it allowed for them to gamble our money? Stock market is just a big poker machine where the rich get to gamble stupid peoples money.

Create a new industry and tax it.

The delusion that super is for your retirement and to benefit you is one of the greatest cons ever pulled off by an Australian Government.

Until all fees are illegal/wiped on all super account - it's a scam.

If the money was really for retirement you would be allowed to invest it in land/property as it has a higher return and gets people out of the rent trap - but the scumbags won't be able to skim your saving then so the government would rather keep this 'money for nothing' rort from their created industry going cause it's taxable.

I paid about $1000 in super during my 1st year of work. I was charged around $960 in fees. Then the gov would tax the last $40 if I wanted it. I just throw all super letter/mail in the bin these days - haven't opened one in years.

Super could be a great thing - but it's a skimming scam. Nothing more.I'll just take the pension my taxes are paying for now and if that doesn't cover the costs of living I'll do crime and steal money just like the super industry does.

Simoc:

03 Apr 2013 12:40:11pm

Superannuation should be optional. Australias most useless people work in this industry. Their record to date is pitiful. And for that they pay themselves $20b p.a thanks to this compulsory regulated industry.Preferably just index superannuation to the top 200 performers on the Australian stock market. That would put us way ahead of the buffoons calling themselves advisors that prove themselves to be less than useless on an annual basis.

But without doubt eventually super will just get paid out in weekly instalments as a wage, so that we can continue to prop up these idiots who would otherwise become unemployable.

Stephen Morris:

03 Apr 2013 12:47:38pm

The real purpose of the modern superannuation system is quite simple: to protect and enrich the finance industry by feeding them captive customers.

Since it was first introduced as a voluntary system in 1985, the modern superannuation regime has become ever more onerous. From 1991 it ceased to be voluntary. In the mid-1990s the rules were changed so that income on pre-1985 contributions couldn?t be withdrawn until retirement age. The rules were changed again to increase the age at which post-Baby Boomers could access their ?savings?. Now the contribution rate is being raised further and the supposed tax benefits reduced.

Realistically, young people are never going to see much of the money they naively believe they are putting into a ?savings? scheme. By the time they reach retirement age, lump sum payouts will have been abolished. They will be permitted an annuity which will more-or-less replace the pension. Anything in excess of that will be taxed. If they die with large balances unaccessed, the Government will reclaim them on the grounds that ?tax-advantaged? savings should not be a windfall to their heirs. It will become a de facto death duty.

The Australian superannuation system has failed in almost every respect ? except that for which it was really devised.

It has not increased national savings levels.

And much of the so-called savings has in fact been recycled straight back to government through the sale of government monopolies, through tax-farming arrangements (such as the sale of road-tolling rights), and through public-private ?partnerships? to finance government expenditure off balance sheet.

The one and only thing that the superannuation system has succeeded in doing is the one thing for which it was really set up ? enriching fund managers and their support industries by feeding them captive customers who must pay at least 1% pa year-in-and-year-out on what they are told is their ?savings?.

This has an historical precedent. In the 1950s and 1960s both political parties in Australia supported the protection of manufacturing industries (largely in Melbourne), feeding them captive customers for needlessly expensive cars and whitegoods.

It was a system that eventually collapsed under the weight of its own inefficiency.

Today in Australia both parties support protection of a funds management industry (largely in Sydney), feeding them captive customers for needlessly expensive and/or unnecessary financial services.

Like tariff protection before it, it is a system that will eventually collapse under the weight of its own inefficiency.

Joe:

03 Apr 2013 12:47:55pm

Alan,

Management of the nations superannuation funds is likely to become a major issue in years to come.

Australia's superannuation industry will become the target of sophisticated fraud schemes and infiltration of criminal elements into senior management ranks to defraud the investors of their hard earned money.

This is a far, far more important issue than the $20billion paid annually, less than 0.2% of funds under management, to the people who manage our superannuation nest eggs.

cicero:

03 Apr 2013 4:18:36pm

Hey Joe, it's already happening mate. Have a look at the Trio Capital Fraud, subject of a Parliamentary Joint Enquiry. Mr Shorten is yet to respond to their findings but they did such a shallow and shabby investigation, no-one is holding their breath. A Trans national crime gang came in and stole $184M from right under APRA and ASIC's noses ( APRA saw them as merely "incompetent", didn't tell ASIC until too late, ASIC scrambling as one of their ex-own was the Compliance Manager of Trio/ASF, no-one is chasing the money). Victims doing their own investigation traced the money to the US with no help from the liquidators, AFP, ASIC or ACC. All should ask exactly where their money is, even Industry Funds.4 Corners and 7.30 have both done reports on this and Mr Shorten and Gov't response so far ? Blame the Victims and compensate their Industry/Union Fund mates!

Ray Manta :

03 Apr 2013 12:49:14pm

$20 billion a year in fees ... that suggests a lot of churning. It is hard not to conclude that the Australian superannuation management industry is a massive rort supported by government and fed by members with very little choice or say, apart from getting right out when they can.

Bradley:

03 Apr 2013 12:54:34pm

Alan, you are spot on when you say that Australian's haven't a clue as to whether they are saving enough, but how could they? To make that determination they would need to know about a host of variables (such as what actual, not likely, inflation and rate of returns will be far off into the future). Impossible for super-computers on Wall Street, finance professors at Harvard and definitely for you and me on main street.

But your constant critique about 'excessive fees' is wearing a bit thin. You exchange your labour for money/fees and other financial rewards, the value of which has some correlation with your education, skills and experience. Why should it be different for professional or institutional investors?

We all want the bloke managing our nest egg to be the brightest, have the best qualifications, the most experience and the best 'track record', yet we feel perfectly justified in whinging about high fees. There is a cost to employing highly educated finance professionals. There is a cost to building and maintaining robust compliance systems to meet the fiduaciary duty that the finance industry owes its clients. These things cost real dollars.

But of course we could just turn the nation's $1.5 trillion over to companies with leaky IT and compliance systems, sub-standard investment employees and trading/settlement/reporting platforms that are shoddy. That should save us a heap in fees, but will we sleep any easier at night?

Just remember that the low cost ETF options you constantly bang on about are created by some of the world's largest, most prudently run fund managers. They employ bright peolpe and pay them handsomely.

People in the finance sector operate in a competitive market and exhange their labour for income just the same way the rest of us do. If they are well paid, its because the market values their skills and is prepared to pay accordingly.

Rob:

03 Apr 2013 12:55:16pm

Glad you raised the point about fees Alan. I somehow think we collectively lose more in fees and mismamangement than we would in increased tax.Also glad you mentioned that we are laden with debt- personal debt -something few seem to want to address.With the global financial system in the mess it is in who in the hell can predict what the future holds for our retirement.

I thought I had done pretty well only to find that my blue chip portfolio is now worth 40% less than it was in 2005 and my income from dividends and interest is far less than projected by by my then financial advisors.

Which goes to show how worthless Abbott's claim that my money is safe with the LNP when it and he has absolutely no control whatever over the corrupt global finance.If anything he panders to it. What a bloody fraud it all is!!

adam:

03 Apr 2013 12:58:38pm

Interesting!

I can say that I allocate money to Super due to the tax effectiveness of that investment.

If the government were to change the tax concessions, well I'd just stop and allocate it somewhere else that's tax effective. This will be particularly true for everybody in the upper income bracket tiers (which, fyi I'm not).

If you're a high income earner, you'll probably have a good accountant and he won't be advising for business as usual and consequently tax-ineffective investment strategy.

On a policy level, unfortunately, it's all "me me me, private property rights bla bla". It's a shame the discussion isn't around the aging population, gaping big govt pension liability: the real challenges and hardships we're to face which could be mitigated with good policy decisions.

ColdWarWarrior:

03 Apr 2013 12:58:57pm

The solution to this debate would be to apply a 0% taxation rate to super contributions regardless of income bracket, that would be fair to all. That way we could do away with this mindless debate of the so called 'rich' on $300k getting a tax break at the expense of the working poor.

If the government is genuine about sustainable retirment which I suspect it is not then it should support 0% super taxation, it would give people a much larger balance on retirment and take pressure off the public pension system.

Of course a sustainable pension system is not a problem the ALP/Gillard government will have top contend with in its time, it can quite confidently kick the can down the road on this one.

Its real motive for taxing higher income earners is to fill its own budget black hole.

zithehouse:

03 Apr 2013 1:00:27pm

What is Supper? Why do we need Super? Who can manage our Super? Till now, no one can give me an good answer. I am a now house wife, who has about $9935 in one Super account 7 years ago when I left the job. I got the recent annual report of that account, contratulate me, the balance now is $8883.34. What have those managers done during these year? I know Super is not reliable. It is a 'joke' to me. I save for myself. $10000 in an e-account with average bank, every year I can get at least $210extra after tax with only 3% rate. How much can I get after 7 years? Everyone can calculate that. Now I am doing is minimise my super and do the investment by myself. I won't charge myself the administration fee and I can guarantee the minimum retain at 3%p.a. if I am not too aggrassive. FORGET ABOUT CURRENT SUPER. YOU CAN GET MORE IF YOU LOOK AFTER YOUR MONEY.

jockster:

03 Apr 2013 1:04:02pm

All that has been proposed in this Tony Baloney is that the the tax deductions for the wealthy give them a disproportionate share of the rebate. They still whinge. I am in education, god job in many ways, 20 years service at executive level. The amount of money that a self funded retiree can get a health care card is damned near to my income. WTF??? Some changes may be needed. Howard and Costello made changes or are they forgotten?

Bill:

03 Apr 2013 1:04:54pm

What no-one seems to grasp is that superannuation funds only manage money. How much money you will need at retirement is almost a meaningless question, unless you can magically predict what a given amount of money will buy.

The answer to that is dependent on, amongst other things, how much money there is about. So the more superannuation money there is - the less it will buy relatively speaking.

Which hints at the great misunderstanding on which the foolish notion of "saving for retirement" is based. That one can provide for one's retirment.

Having lots of money isn't what will provide for your retirement. You will need goods and services, and they will need to be produced at the time you need to consume them. So it is the workers of the future that provide for your retirement, not you. You produce goods and services which are consumed now.

Your money is merely a claim on goods and services, and at that it is only a relative claim. Its real value will be ultimately determined by the number of claims being made relative to the output of goods and services.

The only effect how much people put into superannuation now can have on that, is how well such savings are invested into increasing productivity for the future.

But even assuming that goes well, the greatest factor is still going to be determined by what kind of society we have in the future.

Because if it continues to become more and more of a dog-eat-dog scoiety, as has been the trend in the last 40 years, then the less well the old and sick and weak dogs will be treated. Having more money doesn't necessarily protect an old dog from the wolves. It might just make an old dog a more attractive target to a desperate young dog.

What provides for your retirement is, quite simply, the society you live in. The people who are producing the goods and services you need, when you most need them and are least able to provide them for yourself.

A wise investment in the future is an investment in caring and protecting our caring society, so that it still exists to lokk after you when you retire. Money won't do it, it can only work for a few. When everyone has money, the money will just be worth less in exchange for goods and services you need.

Tax U Bet:

trydifferentname:

03 Apr 2013 1:20:10pm

Alan, The gougers are taking $20bn in fees and you want to require us to be part of that by taking an annuity - tsk tsk tsk.

Firstly the government should be getting 25% of the fees in tax so there is $5bn of the $33bn treasury says is foregone. When you look at the other things people would do to rearrange their affairs I would expect I think the $33bn is just a number thrown out and the reality is an extra tax will achieve a small fraction of this.

The argument should not be about average or median incomes. I am earning well now but it took me 20 years to build a business that paid more than a modest salary. Now I have about 7 years to save for retirement while earning maximally. Our family disposable income is high at the moment but probably not far from average for a person in their peak earning years. And over my lifetime I am probably not far from median income for a skilled occupation. I do not by the $250k household struggle street thing. I do however know that the average Australian household where both partners are working will at some stage approach that level and while at that level will be clearing debt and squirreling like crazy so that something like 75% of median Household income will be theirs in retirement.

I chose to do 6 years of tertiary education and am old enough to say I and my parents who were both low paid unskilled workers paid fees for half of it. The key point is that most saving gets done over a short part most peoples' working lives.

Now the government can see that $1.6tn and wants a bite. The $33bn is a specious figure. As well as the $5bn above, people will rearrange their affairs to deal with it in other ways so much will evaporate. For example, at the moment I take more from my business than I otherwise would to deal with the contributions limit. $25,000 per annum would stay untaxed otherwise. Treasury needs to figure that 15% of something is more than 30% of nothing.

MJMI:

03 Apr 2013 1:22:26pm

Two very useful articles on the superannuation debate on The Drum today.

Thanks for trying to provide sensible information to counter the hysterical and self-serving response from the superannuation industry - the ones "skimming about $20 billion a year in fees and happily supplementing their maxed-out super tax breaks with a spot of negative gearing."

It is so reminiscent of the response to the MRRT proposal that was watered down to almost ineffective because the public was so gullible to believe the bleatings of Rinehart et al. Sometimes what passes as public debate in this country is enough to make strong women weep.

Bingo:

03 Apr 2013 4:48:22pm

Well said, and it makes strong men weep too.

Dark times are here when something as simple as rejigging super tax concession rates to produce a fairer system that works better in avoiding future pension costs is subject to such overt media campaigning when there isn't even a proposal on the table.

If the tax concession is lowered for high income earners, then most people benefit (let's say 90%) from the greater tax take.

It is bizarre that so many of them are reacting in a knee jerk manner against their own interests, let alone the 'fair go' ethos that used to define many Australians.

The public bamboozlement by campaigning, biased media (including the ABC on this issue), political grubs in the LNP and vested interests has got insane.

Bab:

03 Apr 2013 1:22:53pm

"And is it worthwhile for the Government to forgo a large amount of current tax revenue (Treasury's bogus numbers put it at between $32 billion and $45 billion per annum) to achieve that small reduction in pensions later?"

Hell no. But fat chance of News Ltd ever leading the charge against the super industry, eh Alan?

I suspect we are becoming a US-style system where both parties are bought, sold and paid for by the financial services industry.

crow:

03 Apr 2013 1:23:39pm

See the Australian Financial Review of 9 July 2011, the article entitled "There?s a super Ponzi scheme in the making". I quote the lead: "Australian superannuation has the hallmarks of a Ponzi scheme and it could be close to unravelling."

It only looks financially viable while workers are forced to make contributions. In 15 years there will be more people withdrawing cash from super funds than workers contributing to them and the system collapses. This is why the Labor government wants to increase mandatory contributions. This will pay out the baby boomers but Gen X and Y will be out in the cold.

If superannuation didn't exist and somebody suddenly proposed it in its current form, it would be made illegal.

blax5:

03 Apr 2013 1:37:50pm

When we came here 30 years ago we were not eligible to save via a superannuation fund. All our savings are post-tax, but independent we are not. We could have been but our land in the former East Berlin was neither returned nor compensated.

So we managed an 'austerity' household for some years and are now on a part pension. I can tell you from experience that you do not need 60 K p.a. for two people. We manage well on far less, but you need the house and car paid off as well as solar.

kevin 457:

Blurt:

03 Apr 2013 1:41:00pm

"And who can complain about taxing the "fabulously wealthy" more than the wretchedly poor? "

Answers:

1. The Liberal Party led by Tony Abbott who will remove the super tax offset for low income people in a blatant tax raid on super, while maintaining the level of massive taxpayer funding to the well to do.

2. ABC Online news editors and journalists who are running a Murdoch-style negative 'campaign by journalism' against it. No substance and in clear breach of their charter, but they do it anyway.

4. The mob hysterics who make up a lot of the electorate now, and who have become prey to the snake oil and dog whistles. Without even thinking about it, even a vague proposal that makes sense and will probably even benefit them, is to be shouted down because the ALP might do it.

Peter D:

03 Apr 2013 1:41:11pm

That Mr. Kohler is supporting/ part of the News Limited anti Labor Party "Save Our Super" campaign is understandable given he was bought out by News Limited ($30 million by one report) and now works for them.

R. Ambrose Raven:

Ends are being confused with means; the real issue is retirement standard of living, for which superannuation is through custom and practice simply assumed to be the best answer. Of course, as Alan has rightly implied, as with housing, there is an entire industry dedicated to taking as much as possible and leaving as little as possible for retirees? future, while indulging in elaborate efforts to persuade us mug punters of the exact opposite.

There is no automatic correlation between superannuation and retirement standard of living. How funds are used is far more important than the gross amount raised.

Public provision of a wide range of social and economic services - assuming sober and responsible management - will also mean the difference between modest comfort and poverty. It is the threat of good, cheap public services that causes so much political and profit-seeker effort to be put not only into destroying effective public services like public housing, public education, public aged and child care, but also in persuading us the only the profit-seekers can provide good services. Achieving both also further raises the upper limit of the fees gougeable by the profit-seekers. Class warfare, of course.

Worker:

03 Apr 2013 1:49:27pm

The real problem with Super is that I have to be in it. What a gift to those in the industry. I could have paid off my house by now but no, I send it to a pit in the hope that it is there when I retire. What a rort.

ateday:

03 Apr 2013 1:58:25pm

As a self funded retiree with my own SMSF I am ok. Few fees, those being for the yearly ATO required audit and tax return, and the rest for me, or my fund which is not me.However I am much better off than someone using a managed fund paying lots of fees even though they may have started with a lot more than I did.Guess I am lucky.I recommend a SMSF but you must be prepared to manage it diligently.I wonder if the situation in Cyprus is germinating ideas in our treasurer`s head?

Tigero:

Trevor:

03 Apr 2013 2:23:47pm

I must be missing something! It is my understanding that the flat 15% tax on super contributions is limited to a maximum contribution of $25,000 per annum. Based upon the 9% employer rate, that equates to a salary of $277,778 which hardly qualifies the recipient as "fabulously wealthy". After all, once the tax man bites that, it is significantly reduced. But then perhaps you are more like me - 63 years of age with less than $100,000 in super. That's despite sacrifices to enable me to contribute the maximum $25,000 at the preferential tax rate to provide more super for my wife and I to live on in the future. Certainly both of us existing on the age pension is not an option as far as I am concerned. Not only do we need to encourage saving for our future via super but we also need to increase pensions for those that cannot put aside enough super to live reasonably in retirement. Governments of both political persuasions have failed us on both counts.

mao trostsky-marx-lenin:

04 Apr 2013 1:30:26am

Of course not Trev, how dare I think someone earning 2.5 x what my wife I earn combined is fabulously wealthy. Just because we can repay our house & afford to holiday overseas on $110,000 combined means someone on $277.000 must be on the bread line or much worse. These arguments about the "poor" high income earners would be laughable if they weren't so utterly ludicrous.

Kevin Cobley:

03 Apr 2013 2:25:30pm

There needs to be strict limits on tax deductibility on superannuation. the "average annual income of an Australian at around $65,000" is a good marker.All super contributions to a level of 15% of income should be non taxable to this level. The taxation benefits should begin to rise progressively to full taxation at normal income tax rate at a level of double the average income.There could be a contribution limit raised to 20% from the age of 55.The ridiculous situation we have now where Keating savings to age pension payouts are being gobbled up by tax dodgers.

cicero:

03 Apr 2013 2:27:26pm

Thanks Alan for again bringing such important issues into the spotlight. What a mess eh ? Where to start? My idea is for an Independent Superannuation Authority. Surely a sum of $1.3 trillion and growing fast, warrants an independent authority that can work through these serious issues, without political gamesmanship, rubbery figures and media influence. ASIC and APRA, through the Trio debacle if nothing else, have shown themselves inept and incompetent to regulate and manage the Super industry ( and just about everything else). Both sides of politics now throwing up junk about how much makes you rich and how much society owes you when/if you retire. Keating/Hawke when bringing Super into our country made a social contract with us, we will make you pay enforced "pension" contributions and then we will make sure you are looked after in retirement and ensure the safety of these monies. Mr Shorten and this Gov't has certainly broken this contract !Whatever figures you use to determine the current situation, a few things seem very clear to me. Those who have sufficient means to look after themselves in retirement through high salaries/ bequests/trusts, have very high value assets ( check out the vast flotilla of large boats on the harbour, the mansions abounding), need no taxpayer support. So seperate these people out and take them out of the Super system perhaps, I'm talking about Net Worth individuals of $3M plus ( Means Test maybe ?). That then makes the system far fairer for those who are on "normal level" incomes. This Authority can also monitor and regulate Fund Managers and make them accountable for their performance and fees etc. They can also co-ordinate various Govt agencies to prevent or pursue theft and fraud.They could also set fair and reasonable Super benefits for politicians, in line with what other Aussies receive. I may be way off track but please keep the discussion going !

J.T:

03 Apr 2013 2:35:19pm

Alan, This is the unintended consequences of government over reach. Firstly we get the old age pension-government provides it, not as a last resort but as a retirement scheme, then it becomes unsustainable once demographics change. People become blas? about retirement and forget the old adage, you retire when you can afford to. a we Secondly comes the band aid patch for changing demographics, Superannuation-government forcing you to save is thrown up to stand in the gap for government not being able to cover its pension liabilities. Again people become more blas? about retirement and assume they will be able to retire on a mixture of super and pension. Its government trying to be helpful but creating bigger problems- that being people forget to take their own retirement seriously. Plus this is not a legitimate role for government, that being providing for old age. That is an individual responsibility (assuming normal circumstances-not disabled etc.). You don?t have to be a genius to figure it out, especially these days with online compound interest calculators and what not-you just need to work out how much you need to save a year to retire comfortably (comfortable is a subjective term).

Assuming no debt, the average person will probably need $70,000 a year to draw on for say 30 years post retirement (Takes them to 95).That means at 70k a year for 30 years they will need a $1,000,000 dollar lump on the day they retire, this is assuming they need to draw on that million in the first year and that the lump sum continues to compound in the preceding years at 5% a year. To retire with 70k per year you need save $10, 544 a year for 35 years or roughly 17% of the average Australian income per year (assuming the average Aussie earns 60K per year). This also assumes 5% interest and the compounding factor.

So already you need to save nearly double the mandatory super contribution to retire with $1,000,000 in lump sum. We don?t need superannuation; we need to teach kids the power of compounding interest at high school and probably how interest affects their mortgage. This isn?t rocket science; once again the government proves it?s the problem and not the solution.

Don?t be a crutch and people will figure this out for themselves. I have been saving 20K a year since I got my first full time job at 20 and I?m well on my way.

R. Ambrose Raven:

Ends are being confused with means; the real issue is retirement standard of living, for which superannuation is through custom and practice simply assumed to be the best answer. Of course, as Alan has rightly implied, as with housing, there is an entire industry dedicated to taking as much as possible and leaving as little as possible for retirees? future, while indulging in elaborate efforts to persuade us mug punters of the exact opposite.

There is no automatic correlation between superannuation and retirement standard of living. How funds are used is far more important than the gross amount raised.

Public provision of a wide range of social and economic services - assuming sober and responsible management - will also mean the difference between modest comfort and poverty. It is the threat of good, cheap public services that causes so much political and profit-seeker effort to be put not only into destroying effective public services like public housing, public education, public aged and child care, but also in persuading us the only the profit-seekers can provide good services. Achieving both also further raises the upper limit of the fees gougeable by the profit-seekers. Class warfare, of course.

tex:

03 Apr 2013 3:38:19pm

Alan So Alan belongs to Murdochs save our super. Super a program that was opposed by the opposition when introduced and was condemned by Abbott. So now Alan you get paid by the ABC for your opinion of the stock market and you also want too advise readers of your beliefs on superannuation too add weight to Murdochs rants against the government.Our super will not be saved under a coalition government because they do not believe in it they only want the rich to be able to syphon of their high income at a lower tax rate why do you think Costello allowed people reaching retirement age to take out lump sums without having it taxed.So if you are earning $500.000. and your highest rate would be 43c in the dollar if you put $50.000 into super you would pay 15c in the dollar if you are smart you save that in super as means of lowering you tax burden.

Gazza:

I really think when Alan goes off about super fund fees, he should really declare upfront a conflict of interest, since he is actively promoting self managed super funds (SMSF's) to retail clients.

Having read some of his newsletters I was appalled at the language in some of them suggesting that retail clients, in pretty much all circumstances, are better off by starting a SMSF. This is not the case, in fact I believe that only about 20% of people who start a SMSF have the inclination, rationale and understanding required to do this. It is an onerous responsibility and although I would pass very test required to start a SMSF, it is the very last thing I would do. Shop around and you will see that retail funds are pretty competitive. Alan and your accountant are very much beneficiaries of the 'SMSF industry' and he should say so, up front.

Jeff:

03 Apr 2013 4:27:40pm

I can't see any real problem with bringing in tiered input tax for super. Maybe not as high as income tax but definitely based on input. That would be a lot fairer and I think people would see it as such. The only issue I would have is that you can't grab what is already there. The horse has bolted, close the gate and then deal with what happens after that. All new inputs should be taxed at a tiered rate. Current super savings should be left alone.The only problem is our current government seems to have dug themselves into a big hole and are looking at ways to buy their way back out and hopefully back into power. There has been little said about the scrapping of breaks for low income earners. However as this was funded by the mining tax it has not been in place long, is probably costing the government a lot anyway as the mining tax is a bit of a dud, and should be removed. I agree with the Coalition on this one.Lets keep something else in perspective. The government seems hell bent on making out high income earners as being some sort of dodgy tax cheating group. Someone earning $300,000 (the fabulously wealthy) already pays around $110 000 in tax every year. More if they were not smart enough to take out private health insurance. We actually need higher income earners to stay here and help out with taxes. This continual push by the Labour government to make everyone want to stay in low or middle income to avoid penalties will hurt us in the long run. We should be encouraging people to earn as much as possible, pay their tax accordingly and carry on.Super was supposed to be a self funded retirement, organise it as such. Why not ban lump sum payments, or at the very least limit the amount that people can withdraw as a lump. There has to be a better way than what is happening currently.My two cents.

Phil:

03 Apr 2013 4:29:23pm

I'm already limited by caps to what I can put into super without being tax at the top marginal tax rate...I'm 40 years old, meaning I can only contribute $25,000 per year into super - anything over that gets taxed at the top rate...So what is the incentive to put money into super??

MJMI:

03 Apr 2013 6:58:15pm

I'd be careful if I were you. I retired at 60 eleven years ago. Because I had spent many years out of the work force and was later divorced, in my last ten working years I had sacrificed salary into my employer fund, going without holidays and luxuries to do so.

I had had two employers and after retirement drew from one fund with the hope that the industry fund, often ranked in the top three, would continue to earn interest.

But how wrong was I. The GFC wiped about 23% off the face value of the untouched fund. And only about half that amount has been recovered, no matter what glib comments to the contrary appear in the papers from time to time.

If you think you are putting all your savings in superannuation, think again. It is not as safe as it is made out to be - unless you are on the fund's staff and then you are getting your share of the $20 billion in fees.

Phil from Hobart:

03 Apr 2013 4:58:27pm

Swan argues that those at "the very top" have "excessively generous" concessions. Assuming those "the very top" have salaries in excess of $300,000, any concession they receive amounts to 15% (45% tax - 30% tax on conts). 15% is in fact the lowest concession of anyone earning over $37,000.

Peter the Lawyer:

03 Apr 2013 5:00:09pm

Can we please bury the 'tax concessions' cannard?

Those ALP supporters who keep going on about tax concessions seem to be working on the mistaken assumption that all the money made in Australia is owned by the Government and they are letting us keep a bit of it. No, we own the money and the government is stealing it from us under compulsion. So if they choose not to steal some of it by exempting it, they are not forgoing income, they are just not confiscating it.

Lucyb:

RealReformForAustralia:

It is NOT the role of government to ensure that people provide for their own retirement. That is a personal responsibility that we should all undertake without any compulsion from government.

The government should make superannuation voluntary and provide the favourable taxation treatment to incentivise people to change behaviour. At this point in time the government is just providing handouts to those managing the super industry.

Since superannuation is compulsory and our hard earned is forcefully taken from us and paid in part to those managing the superannuation industry it is now time for a discriminatory tax regime to be applied to superannuation companies and their employees.

It bad enough that we are forced to pay for the salaries of public servants but we are now also forced by government to pay for private sector employees also!

tex:

03 Apr 2013 5:59:21pm

Time for realreform How do rationalize your statement that we have to pay for public servants and we are now forced to pay for private sector employees also.So we do not need a defence force, police force,court system.

RealReformForAustralia:

Richard D:

03 Apr 2013 6:14:30pm

Of the 4 potential tax targets of Income, Consumption, Profit, Saving the last place the govt should be looking is savings.The effect tax rate on interest/returns from savings is multiplied by inflation.You might be paying 15% on your super returns but if the return is say 4% & CPI is 2% then the effective tax rate is 30%.The govt never allows for inflation when taxing returns on saving therefore to tax super returns at anything like Income tax marginal rates is simply large scale theft.

Also noticed that the govt did not allow any sort of future tax credit when people were taking a 20% hit on their Super during the GFC

Lucyb:

SuperWal:

03 Apr 2013 7:05:09pm

I recently emailed treasury with some suggestions (which will probably be ignored but one can live & hope), here is a summary:

1. Limit additional concessional tax rated deductions to 5% of the taxable income. This would put those in the position to be using tax minimising structures of having to decide whether to lower their tax deductions to enable a higher superannuation contribution (via a higher taxable income) or to keep minimising tax but then have to find another way to fund their retirement at a higher tax rate. This doesn't specifically target the rich or poor as it is the same treatment for everyone regardless of how much they earn. The ability to contribute extra to super will always be easier for those with larger disposable incomes but at least they can't complain that they are being specifically targeted by this measure.

2. Allow up to an additional 10% of taxable income to be put into a superannuation annuity at the 15% superannuation tax rate. From what I can see a large number of retirees boost Super before retirement then take out large amounts of it tax free to spend & then get government subsidies because they are 'poor' This additional measure doesn't force people to buy annuities but it does enable them to put a combined (with 1 above) 15% of taxable income into super at concessional rates whilst quarantining a portion of it to an annuity. I also believe that the annuity income should be classed as income when calculating health & pension benefits.

3. Encourage Health funds & Superannuation funds to develop a health annuity within superannuation that will fund private health cover into their retirement when they are likely to be needing it more. If it was done that way they would be contributing towards it during their working life at a concessional 15% as opposed to the current 30% allowed as you pay each year. It would protect them against the 30% being wound back in the future, & will enable compounding returns to extend how long the cover would last once they retire. It will cost the budget now, but the longer term (10+years) impact may be beneficial to the long term budget position as more people are covered by private health insurance in their retirement.

moi:

03 Apr 2013 7:31:07pm

The government has lost the plot. Even though they have done some good stuff recent indications are that they are no longer fit to govern. Media policy. 457. Leadership spills. Super. And the list goes on. The prospect of Abbott as PM is scarey but I am now resigned to it.

supercrime:

03 Apr 2013 8:15:15pm

The Trio Capital crime discovered in late 2009 was set up as a seemingly legitimate managed investment fund, approved by ASIC and APRA, with NAB and ANZ banks as trustees, but still thousands of Australians lost their life savings. What did the government do about it's involvement in the crime? It did provide the thieves with a licence to operate and allowed them to carry on undisturbed. The fund operated perfectly to do what it was designed to do - siphon retirement savings out of Australia right under the nose of the regulators by a transnational organized crime gang. The thieves plundered mum and dad superannuation investment savings. The crime did not discriminate between the different types of funds.Yet Bill Shorten did discriminate and regurgitated a hidden Part 23 of the SIS Act that provided compensation for his Industry fund buddies and denied self managed and direct investors. The most despicable act by a politician in Australia's history. What is the next trick the big end of town will pull to legitimise another theft of money from ordinary Australians? Your super is unsafe.

mao trostsky-marx-lenin:

cicero:

04 Apr 2013 8:52:06am

Are you serious mate ? Our SMSF was set up due to us having had many jobs due to retrenchment, moving etc and having small bits of super in different funds, all of which were going backwards due to each fund taking out their big fees. By setting up our SMSF we only pay 1 fee yearly for audits etc and WE decide where our super money goes, not some unknown faceless hedge or managed fund. By the way Trio Capital was a CRIME and FRAUd not a collapse as Mr Shorten would like us to believe. Do you know where your Super money really is ???

Brayza:

03 Apr 2013 10:18:08pm

Wouldn't the simplest and fairest way to treat super contributions be to a) abolish the contributions tax and,b) give everybody a 15% tax rebate on those contributions while at the same time adding super contributions to our taxable income? Having solved the super tax problem?? Lets look at a few other post retirement issues raised by Alen.As a retired financial planner,I have yet to find all these spendaholics disposing of their super in order to gain some Extra Aged Pension! this is because most people soon discover that it is foolish to deprive yourself of a dollar of income in order to "gain" 50 cents extra of aged pension!

pajos:

03 Apr 2013 10:27:30pm

I'm a fan Alan but this is your most subjective post yet. You fail to differentiate between 'for profit' and 'non-profit' superfunds in respect of fees. You would force us to lock our money into an annuity at a time of historically low interest rates when we might be better off investing our money in a term deposit option and changing to a more agressive investment if the GFC eventually ends.

Preventing us from taking super/pension money in a lump sum makes sense, but only if it is phased in so that it does not hurt those who have planned to do so to refurbish their house, for example.

You insult the numerate who do know within reason what their retirment amount will be.How long it will last depends on inflation. Annuities do not overcome that problem either.

Finally calling the 9% SG salary is akin to saying payroll tax is part of salary when in fact both are an impost on employers. Our super provisions certainly have warts but still are the envy of the world. We are a nanny state- please don't encourage more of it.

IB:

03 Apr 2013 11:51:26pm

I'd like to make the point that bureaucratic ineptitude is readily measured by the rate of change. The issues around superannuation have not changed for decades. However, the number of changes affecting super in recent years have been immense. A competent bureaucracy would study the problems, work out the solutions, implement them, and leave a system that is stable for decades to come.

Foxy:

04 Apr 2013 12:02:49am

I don't know where all this is coming from. By the time I retire there will be no pension - or so small no one can survive on it. So spending my lump sum is pointless. I will need it to survive.Everyone nowadays can only put in $25k pre tax including the company contribution. So you, me and everyone can only do $25k pre tax which actually gets taxed at 15% on the way in.We can have a total contribution of $150k total. So if you can put that in, you have already paid 46% on $125k, your money post tax. Everyone. Extremely rich or not, those are the limits.The interest is tax free, depending upon the scheme. Most are.When you take it out on retirement, that is it. If you are taxed, you will need to hit the government up later.Whilst Labour brought in compulsory super, they also had a reasonable benefit limit. Reasonable was a low paid worker. Liberal realised that the country cannot fund the end of the baby boomers, so made it easier to look after yourself. Labour are essentially bringing back a reasonable benefit limit by inputs and tax.And I tend to vote Labour, but Liberal got the changes to super right. Hawke/Keating got starting it right. The current mob are only looking short term.

Asceptic:

04 Apr 2013 12:37:54am

Alan, you say:

"And who can complain about taxing the "fabulously wealthy" more than the wretchedly poor? But now we have to have a debate about where, exactly, the line is between fabulous and wretched these days, given that everyone is burdened by so much debt."

Sorry, but trying to sell the idea that people fortunate enough to be on high incomes are poor because they have taken on too much debt is a ridiculous argument.

If individuals are going to be coerced into quarantining part of their income to superannuation then make it easier for self managed funds to operate.

I should be the one to decide how to invest for the future, not some faceless financial parasite.

Philip:

04 Apr 2013 3:31:30am

Things really got on the nose when the pollies started using excutive wages as a reason to increase the pay of high ranking public servants and then grant themselves a raise to equalise things.It is rare to see a politician over sixty nowadays and many leave public office to work in well paying jobs teed up with contacts made while in office-Tony Blair is a good example

geoff:

04 Apr 2013 7:21:31am

I am astonished that no one has taken Swan to task regarding his statements that the top 1-2% get an unfair share of superannunation concessions. No one mentions that a person earning $300,000 plus is already paying $100,000 in direct income tax and is excluded from most other 'government benefits'. Of course these benefits and concessions are not actually paid for by the government(they actually paid for nothing!) but the same taxpayers whose income make them available. On a related point it could be asked how come some one can earn $300,000 while the 'average worker' only earns $70,000. Perhaps perhaps they work 100 hours/7 days per week, accept much greater responsibility, risk, have developed very high level skillls and knowledge etc that benefits the whole community. Of course all the while pollies have their own special super system, paid in large part by the top 1-2 % of income earners, that is not even mentioned for review. Perhaps that is where the debate about super shold start. Talking about pollies they rank the lowest/amongst the lowest as 'workers' by the community (Galup Nov 12) in terms of honsty, integrity and ethical behavior. Gillard and Swan provide good examples of their outstandinly poor conduct.

Argus Tuft:

Surely, an underlying problem for super, remains a lack of productivity in the way the money is being invested.

It's fine to say, put your money in Telstra. But then you remember the mess the ning-nong managers made of that company 10 to 15 years ago.

The fact remains that the country's business management skills are not up to giving a large proportion of the population 20 to 30 years off work, however much saved money we give them to play with down at the casino.

This is the real tragedy of our current political culture that seems to want to talk about anything except business productivity.

kp:

04 Apr 2013 9:29:02am

What is often overlooked in the debate surrounding taxing the super of high income earners is that there is a cap on the maximum superannuation contribution base for the 9% employer superannuation guarantee of $45,750 per quarter or $183,000 per annum. That is the employer only has to contribute up to a maximum of 9% of $183,000 each year, and does not contrbute any further super regardless of how much more the employee's salary is above that amount. If the income threshold for the increased tax rate is reduced to $180,000 then someone earning over that amount will be paying a higher tax on their super without actually receiving any additional super. The tax system should not discourage people from earning more by making them worse off at a higher income level than they would be at a lower income level.

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